Human Resource Management: Theory and Practice, Essay Example

Introduction

Human resources management (HRM) emerged together with the need to operate large numbers of workforce and fit the demands of the most valuable corporate assets, the employees, with the company objectives, and to ensure adequate conditions for workers of various kinds, types and categories. The HRM field reflects the major part of people management, i.e. coordination of all policies, processes and practices connected with managing people currently employed in a certain organization. The HRM has faced much criticism currently, and is even considered to be the barrier in building the flexible and supportive environment in an organization, acting as a restrictive tool for reducing payroll and contributing to the employee turnover (Mathis and Jackson 4).

Indeed, at times the activities of HRM executives seem to be more directed at activities than results; nonetheless, the importance of human resources and effective management thereof has long ago been recognized as a vital element of successful competition in the market. More than that, HRM is fairly considered to be one of the companies’ core competencies, under the condition of good coordination and organization (Mathis and Jackson 4). HRM also helps the company find the proper balance in the realm of legal requirements restraining  the work of organizations and protecting employees; it ensures compensation reconsiderations according to the employee performance, and serves as a driving force for employee motivation in performance increases.

The significance of HRM has been recognized as soon as the inner processes governing the activity of any organization have been detected. It is obvious that any organization has a set of assets it manages in the process of its activity: they include physical, financial, intangible, and human resources. Nonetheless, even being equal in row with other resources, the human resources really make the activity of any company work; they represent the ‘glue’ that combines and coordinates the resources, making them bring profit for the company. Logically, one should realize that there is no way to keep the company functioning without human resources, and even under the condition of poor functioning thereof (Mathis and Jackson 4). Proper HRM can help the company save considerable costs for recruiting and retraining, talent detection may help it educate its own leaders and managers etc. – there are numerous examples of the way HRM may benefit a company. They explain the current close attention to HRM and outline the main areas of research in the field of its improvement and successful implementation.

The modern focus on HRM and its implementation in business structures is explained by the wish to establish fast and responsive organizations that can quickly handle the changes in the external and internal environment. The HRM provides the company with the ability to recruit, train and retain employees, and to align their activities with corporate objectives. The traditional, isolated approach to HRM is no longer used, with the organization giving additional responsibilities and powers to HR managers in the overall struggle for better performance of the whole business unit.

Definition

Before defining the concept of ‘human resources management’, one has to track its evolution from the term ‘personnel management’ that emerged in the 20^th century to denote the response of employees to public policies and union activities and changed gradually under the pressure of the global change, socio-economic changes and tendencies etc. (Bratton and Gold 6). The full definition of the HRM concept looks as follows:

“That part of the management process that specializes in the management of people in work organizations. HRM emphasizes that employees are critical to achieving sustainable competitive advantage, that human resources practices need to be integrated with the corporate strategy, and that human resource specialists help organizational controllers to meet both efficiency and equity objectives” (Bratton and Gold 11).

However, even upon seeing the definition, one still may not have a clear idea of what management really stands for in the described situation, and what human resources mean in the given context. The human resources actually mean the human capital that represents one of the company’s assets (alongside with the physical, financial and intangible ones) (Mathis and Jackson 5). The human capital is viewed in the collection of all capabilities, knowledge, skills, life experience, motivation etc. that employees of a certain organization possess. Hence, management thereof refers to the proper distribution of positions, adequate rewards corresponding to the employee performance, training and staffing etc. Consequently, one may understand the definition as a way to manage the human capital in the most productive and efficient way so that the company could enhance its core competencies and ensure a firmer position in the marketplace.

Features and Characteristics of HRM

There is a set of features defining the nature of HRM and its place within the organizational framework. The first feature refers to knowledge management; it pertains to any aspect of creating, obtaining, sharing and utilizing knowledge of any kind (Armstrong 9). The key role of HRM concerning knowledge is to conduct activities to develop, generate, and preserve any knowledge specific for the needs of the company. It is also essential to note that knowledge in the focus of HRM derives from organizational learning processes (Armstrong 9).

The next feature is reward management; it results directly from the incentive of HRM professionals to increase motivation, job management, and commitment of employees towards their company. These practices can be achieved by introducing policies of showing that employees are valued and rewarded according to their performance (Armstrong 9). It is essential to implement various reward instruments and schemes so that they would suit the whole range of competencies and skills of the company’s staff. In addition, the successful HRM strategy should not focus on restrictive sanctions for employees who fall behind in their performance; instead, it should emphasize strengths and promote potentially creative and committed individuals.

Fostering constructive and supportive employee relations is another feature of HRM. Promoting the working climate with productive and harmonious relationships is made possible through positive partnership between management and workplace (Armstrong 9). Trade unions are also involved in the employee relations to ensure the comprehensive effect of HRM in building the coherent and mutually satisfied employee structure. The main challenge of this process is in the next feature of HRM: meeting diverse needs of all company stakeholders (Armstrong 10). Individual and group needs have to be taken into account to design equal opportunities for all employees disregarding the peculiarities of their working style, aspirations, and capabilities.

Finally, the HRM feature is bridging the gap between rhetoric and reality. The company’s mission and vision, HR strategy and corporate responsibility are laid down in all written codes and regulations of the company, annual reports and presentations for shareholders. However, as soon as the planned HR practices are implemented, a number of barriers (including limited support, inadequate infrastructure, lack of resources etc.) preclude those strategies from being successfully introduced. Hence, the ability of HRM nowadays is in identifying such gaps and allocating proper resources for making HR strategies a commonplace organizational reality (Armstrong 10).

Drawing certain conclusions from the discussed HRM features, one can come to understanding the key HRM characteristics shaping its modern image and structure. They are as follows:

diverse (it is essential to encourage diversity in HRM practices because of the integrated, comprehensive and over-grasping focus of HRM aimed at creating a harmonious, homogeneous, and at the same time individually tailored structure of employee relationships with management) (Armstrong 9):

• strategically focused, with emphasis on integration (there is no place for an isolated approach anymore; HRM is embedded in all aspects of corporate functioning, striving to the creation of a coherent, interlinked employee system) (Armstrong 9);
• oriented on commitment (only under the condition of employee trust and loyalty towards the company, HRM can achieve the stipulated corporate goals and make the human resources act as a unifying and enacting force for other company assets) (Armstrong 9);
• HRM is based on the belief that working individuals should be treated as assets, i.e. the human capital (in other way common HRM strategies and assessment tools would not work) (Armstrong 9);
• unitarist and individualistic approach towards employee relations (the workforce should act as a unified, congruent force, but at the same time individual needs, wants, aspirations and ambitions should be taken into account and encouraged to ensure corporate growth and accumulation of intelligence and knowledge) (Armstrong 9);
• management-driven (HRM is seen as a line management responsibility, changing the nature of HRM delivery) (Armstrong 10);
• focused on business values (human resources are nurtured, developed and managed, but always with the proper respect to the company objectives; the HRM should always be consistent with business objectives) (Armstrong 10).

HRM Goals

There are a large number of specific and general goals pursued by modern HRM, but considerable research and review have allowed to focus on the twelve dominant policy goals proposed by Caldwell (2004) and cited in Armstrong:

• People constituting an organizational workforce should be treated as the asset crucial for the creation of the competitive advantage for the company in the marketplace. The essence of the goal is to gain the competitive level of performance for the company to become a strong contender with a firm position in the market; it is vital to realize that even under the condition of having plentiful resources of other kind, the company will never achieve success because of the inability to utilize the resources. Without the workforce, there will be no tools for operating and manipulating the company’s resources for the sake of economic profit. Hence, the human capital is the most essential asset possessed by the company, and it has to be treated accordingly (Armstrong 10).
• The HRM policies have to be aligned with the business policies and corporate strategy of every given company. This goal explains the very purpose of HRM existence – through the effective and thoughtful management of the company’s human capital, the HRM department assists the company in gaining the competitive advantage in the market and increasing the employee performance through commitment and encouragement of creativity (Armstrong 10).
• The HRM system is aimed at developing a close fit of HR policies, procedures and systems with one another. Only under the condition of the close connection and alignment of all HR elements within the organizational structure, the successful implementation of HRM principles becomes possible and potentially profitable for the company (Armstrong 10).
• The HRM is responsible for creating a flatter and more flexible organization. The ultimate goal of that effort is to make the company more responsive to the changes of the internal and external business environment. The modern business world is characterized by a high level of turbulence and uncertainty, crises in all spheres of human activity, hence only the affluent and flexible business entities can survive in the harsh atmosphere of making business. The HRM effort can make the company stronger from the inside and reinforce its outer strengths (Armstrong 10).
• The HRM should encourage teamwork and cooperation inside the organization. The specific advantage of such efforts can be seen in the strengthening of the employee interconnection, mutual support and emotional intelligence (Armstrong 10).
• The creation of a strong customer-first philosophy throughout the organization is another policy goal of HRM; the main focus of HRM is driven on the individually correct but still corporately shaped system of employee management, training and rewarding. The employees have to realize their value for the company to be able to provide their respect and commitment to the customer in turn (Armstrong 10).
• Employees have to be empowered for self-management, learning and development. HRM creates the basis for corporate leadership programs to educate the company’s leaders, professionals and inspirers instead of hiring them from outside (Armstrong 10).
• HRM should develop rewarding strategies directly tied to employee performance. Despite the commonly known criticism of the approach, financial incentives still remain a powerful driving force in the increase of performance and commitment (Armstrong 11).
• Internal communication improvement is the goal for HRM effort because of its importance for employee involvement in the company issues. The better the employees are informed about the internal matters of their company, the more trusting their relationships with the employer are, and the higher the commitment is (Armstrong 11).
• A more general HRM is in building the greater employee commitment; it can be achieved by additional means other than financial ones, including strengthening the corporate culture, involving employees in extra-work events and promoting various activities exploring the employees’ talents, ambitions and abilities (Armstrong 11).
• Increasing line management responsibility for the HR policies is another major goal of HRM; as it has been already mentioned, HRM is growing in its importance and grasps others areas of company functioning. Therefore, HRM is equal in responsibilities with line management, providing more ties and interconnections between the internal aspects of management (Armstrong 11).
• Finally, HRM should empower managers in the role of enablers. This refers both to the allocation of financial resources for solving some urgent business matters, and to the empowerment of capable employees offering their potential and creativity to the company (Armstrong 11).

Strategic HRM

Strategic HRM is substantially different from the RHM process itself because it focuses mainly on the activities affecting the behavior of individuals in an effort to formulate and introduce strategic needs of the business (Armstrong and Baron 41). Hence, one can understand that the strategic HRM reflects not the real-time, but the future intentions of the organization regarding the HRM organization, procedures and policies. It includes the long-term people issues, defining the HR strategies that have to be identified for the future effort of the HRM department. In addition, the strategic HRM peculiarity is that it concerns the macro-concerns at the organizational level, including the structure, values, culture, performance, rewards, motivation etc. The aim of strategic HRM deriving from its features consists in the creation of the strategic capability for the company to possess the highly committed, skilled and motivated employees to enhance the company’s competitive advantage in terms of human assets. In order to achieve that aim, the strategic HRM needs to fulfill the individual and collective needs of the employees to further on implement coherent and practical HR policies and programs (Armstrong and Baron 41-42).

Before proceeding to the practical discussion of existing HRM strategies, one has to identify the modern approaches to HRM strategy; they include the classical, processual and systemic ones, having many proponents and followers in the global theoretical HRM thought. The classical approach defends the ‘cold’ analysis of organizational environment and the company’s internal resources, with the further identification of strategic options and final implementation of the chosen strategy (Wilczek 2). It is vital to remember that there is a clear distinction between the authorities responsible for strategy generation and implementation thereof. According to the classical approach, strategies are created by top management and implemented by operational managers (Wilczek 2).

The processual approach promotes the strategic flexibility of the company; it argues that strategies are formulated and implemented in an integrated, non-disruptive manner at all levels of an organization. The approach is more viable for the company in a turbulent environment, with the clear need for expertise and creativity at all levels of the organizational structure (Wilczek 3). The third approach, however, includes the socio-cultural and economic context of the countries in which the strategy is formulated into the strategic HRM process. The proponents of the systemic approach argue that cultural and geographical differences seriously affect the process of strategy formation as well as its outcomes (Wilczek 3).

Consequently, proceeding to the models of strategic HRM, one has to identify its nature as a search of the ‘best fit’ within the organizational structure. The strategic fit is the central concept of strategic HRM, also called the matching model. The essence of the model is in making the HR strategy aligned with business strategies of the company (representing the vertical fit) (Armstrong and Baron 44). The vertical fit is the integral part contributing to the business planning process in an organization; it has to match the life cycle stages of the company and be individually tailored to the dynamics of its development (Armstrong and Baron 46).

The horizontal fit is nevertheless as important as the vertical one, as the HR strategies have to be aligned from the inside, i.e. there should be a high level of coherence between the different elements of people strategies (Armstrong and Baron 44). The logical interconnection among the mutually supportive practices of the HR strategy can ensure the success of the horizontal fit, making the HR strategy the ‘best fit’, the chief objective of the overall corporate strategy. The resource-based approach to HRM strategy also provides a sound foundation for the development and implementation of strategic HRM within the organization; it dictates the resource-based approach to all tangible and intangible assets possessed by the company, and utilization thereof with the purpose of being competitive in the market (Armstrong and Baron 53).

Functions Reflected in Business Practices

Staffing

The success of any organization depends on the allocation of proper human resources in proper positions to ensure their full engagement, job satisfaction and adequate rewards for the performance; however, the current review of staffing practices has shown much incongruence with the ideal objectives stipulated in each HRM department. The wrongdoings include hoarding professionals at the expense of the organization, fostering promotions on biased principles without consideration of organization-wide options, limiting individual opportunities and depriving them from feedback, promoting decrease of confidence etc. (Fombrun, Tichy, and Devanna 58). All of them lead to employee turnover and loss of intelligence, knowledge and expertise.

Introducing the strategic HRM practices in staffing now plays the crucial role in the success of the organization in the accomplishment of its business objectives. The key processes are the specification of qualification, identification of people possessing those skills, and relocating the employees to the positions that fit them the most (Fombrun et al. 58). The staffing policies are affected by the dominant corporate culture and the stage of business development (the start-up business will conduct recruiting activities to form the staff, while the business at a stage of decline can relocate the existing staff or even involve professionals from external resources to revitalize the organization). Some constructive modern HRM practices regarding staffing within an organization include job posting, management development, and succession planning for the sake of HRM integration in all fields of organizational functioning (Fombrun et al. 65).

Performance Appraisal

Performance appraisal is another central element of successful HRM because it provides the assessment and identification of critical job behaviors of the management, specifying the objectives of each manage, and agreeing on the steps and resources necessary for the achievement of those objectives (Fombrun et al. 87). There is a high risk of selective focusing in the performance appraisal, especially concerning the top management, because of lack of subjectivity and absence of anonymity. Hence, the innovative HRM practices in appraisal have to be introduced to ensure the successful accomplishment of business goals and strategies.

There are several categories of measures that can be used for performance appraisal; outcome measures are a strong indicator, but they fail to support the appraisal system in full because of the focus on results depriving managers of the opportunity to assess the process of achieving results. This approach may cause the deterioration of the system instead of its improvement, so the behavioral measures should complement the outcome ones (Fombrun et al. 91). Behavioral measures help identify the critical behavior that may aid employees in completing the objectives stipulated for their position, and the critical incident technique may be implemented for the assessment of the employee correspondence to their positions. Behavior measures are also highly helpful in selecting employees and establishing monetary rewards (Fombrun et al. 94).

The job behavioral analysis is utilized to identify the activities top managers have to conduct to implement the strategic plan. Here two types of training programs have proven to assist in objective achievement: accurate recording of what is seen, and giving feedback as well as setting the performance goals. These programs ensure objectivity and enhance the development of self-management capabilities to promote business strategies on the organization-wide level (Fombrun et al. 100).

Compensation and Benefit

The reward system in any organization may play both functional and dysfunctional roles because of the motivation or discouragement that it may bring to the employees. However, it is essential to note that the compensation system, in case it is properly designed, may become the key contributor to the effectiveness of the HR strategy and employee commitment increase. The strategic role of the reward system lies within the behavioral effect it may produce on employees, hence it has to be thoroughly considered in order to estimate the drives and incentives to be used in the effective HRM system design (Fombrun et al. 127).

The first outcome a successful reward system may offer to the company is the attraction and retention of employees. It is widely known that the companies offering the highest monetary rewards still attract the largest numbers of employees and retain them stronger and longer than other companies do. Hence, the monetary motivation turns out to be fairly strong nowadays (Fombrun et al. 128). In addition, the motivation outcome is also the direct consequence of the properly designed reward system – employees who earn more are more committed to their company, they possess a higher level of loyalty and resourcefulness towards their employer.

The organizational culture is also affected by the reward system; the way rewards are developed, administered and managed affect the culture and shape its type, e.g. participant, entrepreneurial or other ones (Fombrun et al. 128). Reinforcement and definition of the company structure are also affected by the reward system – as usual, the hierarchical structure of corresponding rewarding systems for different levels of management (Fombrun et al. 128). Finally, the compensation to employees affects the cost structure of the company. The salaries to employees traditionally constitute a large share of the company’s operating costs; hence, the thoughtful design of rewards and appraisals may save the company a considerable sum of money and help it allocate resources more productively.

Conclusion

HRM now plays an increasingly important role in building the business strategy and achieving the competitive advantage in the marketplace. With the emergence of the innovative approach to human resources as the strongest company asset, a variety of HRM approaches has been developed to assist the company in aligning people management with the business objectives and strategies. Therefore, it is totally possible to state that the modern organizational structure welcomes an integrated HRM system having equal opportunities and responsibilities with line management and operating in a wide range of areas to sustain the company’s consistence with its strategies.

The basis of the HRM processes is successful staffing, planning, management, identification of reward systems, identification of the company’s internal resources etc. All these activities are called to enhance the company’s competitive position and to reinforce its human capital potential. Strategic HRM is focused on the future perspectives pursued by the company, so it is directed at the macro-environment of the organization. The key processes and functions of strategic HRM constitute effective staffing (that is, proper allocation of employees according to their potential and skills), performance appraisal (both according to the behavioral patterns and outcome measures), and design of effective reward systems that would assist the company in accomplishing its business strategy.

Works Cited

Armstrong, Michael. A handbook of human resource management practice. 10^th ed. London: Kogan Page Publishers, 2006. Print.

Armstrong, Michael, and Angela Baron. Strategic HRM: the key to improved business performance. London: CIPD Publishing, 2002. Print.

Bratton, John, and Jeffrey Gold. Human Resource Management: Theory and Practice. 2^nd ed. New Jersey: Routledge, 2001. Print.

Fombrun, J. Charles, Tichy, M. Noel, and Mary Anne Devanna. Strategic human resource management. San Francisco: John Wiley and Sons, 1984. Print.

Mathis, L. Robert, and John H. Jackson. Human resource management. 12^th ed. Mason, OH: Cengage Learning, 2008.  Print.

Wilczek, Tim. The “Classical Model” for Practising Human Resource Management: …or is There a Need for an Integrated Approach Including Specialised Human Resource Strategies? Norderstedt, Germany: GRIN Verlag, 2008. Print.